Literature review

Literature review

1. Introducing the Cascadia case and its relevance for the project objective

It is necessary to study the Cascadia case in order to have a better understanding of differences existing in social, cultural, and political elements that are influencing numerous policy fields both in North America and Europe. Also, the actors that play their part in shaping the cross-border regions and the magnitude of their influence are of critical importance in the development of the final project.

Dupeyron (2008) tried to determine how the cross-border regions are formed by comparing the European Union cross-border regions of Upper Rhine (France-Germany-Switzerland) and the Mediterranean Euro-region (France-Spain) with Cascadia in North America. The latter is a very important trade region between Canada and US consisting of British Columbia in Canada along withOregon,Washington, and portions of otherstates such as Yukon,Idaho,Wyoming, andWestern Montana.

The results of the study shows that in terms of institutionalizing certain issues, the networks, actors and organizations tend to follow their own interests and thus encouraging more restricted definitions of border regions both in Cascadia and Europe. On one hand, a deeper analysis of this actors revel, that in Europe the public sector has a greater influence which creates problems in cross-border cooperation in terms of an efficient mobilization of actors and policies. On the other hand, in Cascadia, the private sector dictates.

Differences are encounter also in their modes of multilevel governance which means the distinction between policies in the hands of national government and policies resulting from interactions between local, regional and state actors. Cascadia has a bottom-up approach private- where the funds are extracted from private and public sub-national networks while the top-down approach characterizes Europe. Dominated by the European Union, most countries have delegated their prerogatives to supranational bodies.

2. Cross-border externalities: typology and impact on country specializationAs many countries are contemplating the idea of regional integration, an important number of studies have focused on explaining what Paul Krugman described as the new economic geography focusing in particularly on economic agglomeration.

One of the major concerns in the NEG models was and still is the achieving of short-term and long-term equilibrium (Clipa et al., 2012) which can be obtained by a combination of centripetal and centrifugal forces. (Krugman, 1998)

The centripetal forces are the ones that pull economic activities together. This idea is stated by Johansson and Quigley, (2004) who considers that firms with internal economies of scale benefit from agglomeration in terms of the existence of a bigger demand which allows the development of differentiated products.

Also Johansson and Quigley (2004) sustained that individual firms belonging to an agglomeration may buy more specialized inputs at lower transactions costs from differentiated input suppliers.

Opposite to agglomeration, the dispersion forces are separate according to Henderson, Shalizi, Venables (2001) in 3 types: negative externalities from congestion, prices and extent of the market.

Agglomeration occurs when the spatial concentration of one or more economic activity increases the size of the market and through it, a new spatial concentration of industries. (Clipa et al., 2012) According to Porter (2000) location has an indubitable influence on productivity thus having an effect on economic growth.

In order to cope with all this changes, countries have to adopt a series of economic, institutional and social restructuring at level of companies, government and other institutions (Porter, 2000). Companies should focus on the competitive advantage from outside the company and even outside the industry, governments policies are created in the spirit of removing obstacle to trade at both macro and especially micro-level. As Porter (2000) mentioned next, cooperation between different type of organizations such as schools, universities, and public utilities is a must-have.

Another approach is arguing that networks of actors dispersed over space may substitute for agglomerations of actors at a single point (Johansson, Quigley, 2004 p.165). This substitution is possible through the standardization of commodities due to the new technological innovations and arose from the possibility to reduce transaction costs. (Johansson, Quigley, 2004)

Another aspect relevant into understanding the functioning of agglomerations is the well debated problem of proximity. Damien Talbot in Institutions as creators of proximity (2007) explains its three components: geographic, institutional and organizational Geographical proximity can be either a source of conflict or better operation between the members within a geographic space. Institutional proximity comprises a group of people that share and follow the same ideas implemented by an institution. Organizational proximity is defined as a difference between cognitive coordination and political coordination.

Relevant literature in the field had investigated the effects of the cross-border externalities in shaping the new world with an important number of methodologies, data and results. Even if the literature does not provide yet a clear role of the geographic proximities in knowledge spillovers the works of several authors bring important information in the field.

Cho and Nicley used data from 48 counties in US in order to explain the concept of geographic proximity and how it can be shaped by the influence of state borders.

They found evidence that the liaisons existing between border institutions and the effects of geographic proximity are complex and various. First, within the state, it leads to the appearance of like-minded clusters in proximate regions. Secondly, if we refer to different states the political behavior of clusters begins to deplete because the state border creates a barrier that limit political and economic institutions, policies, and sometimes movement. As a result the importance of geographic proximity is less important than institutional factors that condition political behavior. Furthermore Williams and Balaz (2007) demonstrate that the appearance of Low-Cost Carriers after the re-regulation of air industry through EU directives and national agencies have affected the development of regional externalities and institutions. The role of LCC has become of vital importance in mobile markets especially tourism, knowledge, labor migration and trade flows by providing a lower transaction cost and thus creating new opportunities for trade between regions that were in an unfavorable position due to their geographic area.In another study, Ponds, Oort and Frenken reached the conclusion that geographical proximity is a way to overcome institutional differences and is more relevant for collaboration between organizations. The study also shows that the national level is more important for collaboration between companies and academic organizations and the regional level for academic and governmental organization collaborations

References

1. Clipa, R. I., Pohoata, I., Clipa, F., 2012. Noua geografie economica si politica regionala a Romaniei. Economie teoretica si aplicata, Volumul XIX, Nr. 8(573), pp. 3-16.

2. Dupeyron, B., 2008. Cascadia Revisited from European Case Studies: the Social Political Space of Cross-Border Networks. Canadian Political Science Review, Vol 2(2), pp. 84-103.

3. Henderson, J. V., Shalizi, Z., Venables, A. J., 2001. Geography and development. Journal of Economic Geography 1, pp. 81-105.

4. Johansson, B., Quigley, J. M., 2004. Agglomeration and networks in spatial economie. Papers Reg. Sci. 83, pp. 165176.

5. Krugman, P., 1998. Whats new about the new economic geography?. Oxford review of Economic policy, Vol. 14, No. 2.

6. Ponds, R., van Oort, F., Frenken, K., 2007. The geographical and institutional proximity of research collaboration. Papers in Regional Science, Vol. 86, No. 3, pp. 423-4447. Porter, M. E., 2000. Location, Competition, and Economic Development: Local Clusters in a Global Economy. Economic Development Quarterly, Vol. 14, No. 1, pp. 15-34.8. Talbot, D., 2007. Institutions as creators of proximities. Copenhagen, CBS, Denmark, June 18 20.

9. Tam Cho, W. K., Nicley, E. P., 2008. Geographic Proximity Versus Institutions Evaluating Borders as Real Political Boundaries, American Politics Research Sage Publications.

10. Williams, A. M. and Balaz, V., 2009. Low-Cost Carriers, Economies of Flows and Regional Externalities. Regional Studies, Volume 43.5, p. 677691